Introduction to business 3: Expenses

Close topic Taxable period Tax returns are based on the fiscal year ending 31 March, although other fiscal year-ends are possible if permission is obtained.

Tax returns The system is one of self-assessment, under which the corporation files an income tax return each year. For those not linked to a tax agent, returns must be filed by 7 July for balance dates between 1 October and 31 March, or by the seventh day of the fourth month following a balance date between 1 April and 30 September.

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The filing date for taxpayers linked to a tax agent is extended to 31 March of the following year. Payment of tax Terminal tax payment is due on 7 February for balance dates between 31 March and 30 September.

For other balance dates, terminal tax payments are generally due on the seventh day of the 11th month following the balance date. The terminal tax due date is extended by two months for taxpayers linked to a tax agent.

Provisional tax payments are generally due in three instalments: The final instalment must be calculated based on the first option above. The GST ratio option. The GST ratio option enables smaller taxpayers to align their provisional tax payments with their cash flow and reduce their exposure to use of money interest. The option is intended to benefit those taxpayers with declining, seasonal, or fluctuating income. With effect from 1 April , a new method for calculating provisional tax payable, the AIM, is available for businesses with gross annual income of less than NSD 5 million.

The resulting amount is payable by the taxpayer as a provisional tax instalment. Taxpayers can also make voluntary payments. Such payments can be made to minimise exposure to use of money interest. A taxpayer choosing to estimate residual income tax is required to take reasonable care when estimating. This results in either a refund or further tax to pay by way of terminal tax. For the year and prior, where provisional tax paid was less than the amount of income tax deemed due on that instalment date, interest was imposed.

If provisional tax was overpaid, interest was payable to the taxpayer.

Interest was deductible for tax purposes by business taxpayers, and interest earned on overpaid provisional tax was gross income for tax purposes. From the year and onwards, there will be no interest charged by or received from Inland Revenue if the first and second instalments are in line with the standard uplift method described as options 1 and 2 above. A taxpayer will be exposed to full use-of money interest UOMI from the point they choose to estimate.

Tax pooling Taxpayers are able to pool their provisional tax payments with those of other taxpayers through an arrangement with a commercial intermediary. Tax pooling allows underpayments to be offset by overpayments within the same pool and vice versa. Inland Revenue is required to notify a taxpayer the first time their payment is late rather than imposing an immediate late payment penalty. If payment is not made by a certain date, a late payment penalty will be imposed.

Taxpayers will be entitled to one notification every two years. After receiving a first warning, Inland Revenue will not send further notifications for two years, and an initial late payment penalty will be imposed in the normal manner.

Shortfall penalties Shortfall penalties, calculated as a percentage of the tax shortfall resulting from the action or position taken by the taxpayer in a tax return, may also apply. Tax audit process Inland Revenue maintains an active audit programme across all tax types and taxpayer profiles and regularly publishes information about their compliance focus. Often, Inland Revenue audits are preceded by a risk review where Inland Revenue requests information in order to evaluate the risk of non-compliance.

Where this review detects an issue that requires further inspection, Inland Revenue will then advise that an audit will be commenced. Statute of limitations The general rule is that Inland Revenue has four years from the end of the New Zealand income tax year 31 March in which the return is filed to re-assess the return, unless the return is fraudulent, wilfully misleading, or omits income of a particular nature or source.

In particular, Inland Revenue is focussing on the following: Lack of transfer pricing documentation, major downwards shifts in profitability, widely differing profits between local entities and their global group members, unsustainable levels of royalties or management fees, transactions with low or no tax jurisdictions, and chronically recurring losses. Technical compliance, possible New Zealand tax residency of CFCs through local management control or director decision making.

Taxation of digital goods and services provided over the internet, hybrid mismatches occurring as a result of variances in tax treatment between countries, and misuse of tax treaties.

Associated party transactions, non-routine transactions, and zero rating of goods or services. Transactions with non-residents and non-resident contractors. Other key focus areas include the following:

Close topic Taxable period Tax returns are based on the fiscal year ending 31 March, although other fiscal year-ends are possible if permission is obtained.

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Introduction to business 2: Income and provisional tax

{REPLACEMENT-(Зайцев.нет)-(web-climat.ru)}Hong Kong Russian Federation Some agreements protect pension payments as well. The agreement with the United States, for example, prohibits New Zealand from taxing American social security or government pension payments, and the reverse is also true.